OpenText building
PHOTO: Michael Schneider

It’s a little over a year since I offered my take on the (then) recent OpenText acquisition of Documentum. At the time, I was pretty skeptical the buy was anything more than a land grab to get maintenance revenue and boost short-term earnings per share. 

My reasoning was the OpenText and Documentum product sets overlap nearly 100 percent across all enterprise content management (ECM) capabilities and there was no way to sustain two duplicate platforms (and no benefits for doing so). 

Based on that, I also argued the acquisition would be followed by 1) underinvestment in terms of dollars and innovation in Documentum and 2) a push to move as many Documentum customers as possible to OpenText.

My perspective admittedly represents a limited subset of the market — based on conversations with Doculabs clients and people I speak with at industry events — so take it with a grain or two of salt. Yet I would still argue developments in the last year have proved me right.

Related Article: Planning a Documentum Exit Strategy

From Wait and See to Get Out

In terms of what I’m seeing cross-industry (we’ll get to some specific industries in a minute), the majority of current Documentum customers I have heard about or spoken to directly are either 1) planning to move to a new platform or 2) in the process of doing so. And I have only heard of one Documentum customer contemplating a move to OpenText despite the effort OpenText is making to get them do so.

Because of the daunting complexity and cost of changing ECM platforms, the process is going to be a long, painful one from the people, process and technology perspectives, so the exodus from Documentum won’t fully gut the customer base for some time, but in my opinion, there’s no stopping that train. 

Core OpenText Users Staying Put

OpenText’s bread and butter has traditionally been heavy industry (utilities, oil and gas, manufacturing, construction, etc.), and I’m not seeing these organizations going anywhere. I believe there are three reasons for this: the cost and complexity of moving, the lack of any true apples-to-apples options to consider for replacement platforms, and the fact that OpenText is continuing to support and working to innovate its legacy products.

To be fair, these businesses shouldn’t think about moving. OpenText provides good value and isn’t going anywhere, so leave well enough alone. Given the fact that most of these same firms are also migrating parts of their workloads to Office 365 or are in the early days of adopting it (and dealing with all that means), they likely have bigger fish to fry in terms of their ECM programs anyway.

Related Article: OpenText Counters Documentum Criticisms

The Bad News About Life Sciences

Unfortunately for OpenText, the picture in Life Sciences isn’t nearly as rosy. In my travels over the last year, every firm in this vertical I’ve personally spoken with is not going to stick with Documentum as a strategic, go-forward platform. Again, see above for the biases of my perspective. But in terms of organizations moving from Documentum to OpenText, I’ve only heard (secondhand) of one Life Sciences firm doing so.

Even if you adjust for the fact my perspective is based on conversations with ECM folks at 15 of the top 30 life sciences firms in the last year, and if you assume the other 15 are either doubling down on Documentum as a go-forward platform or moving to OpenText, it still implies it has lost half of the big Life Sciences firms globally.

Given that firms in other industries (outside of OpenText’s core user base in heavy industry) are moving slowly to exit Documentum, why is Life Sciences moving so much more quickly? Here’s my take. Although the cost and complexity of moving ECM platforms in the Life Sciences are no lower (and are arguably higher) than in other industries, Life Sciences firms have a viable alternative to Documentum: Veeva.

And make no mistake, Veeva is actively pursuing these customers by making its platform as attractive as possible: from the pace of product innovation and an impressive full-court sales push to doubling down on client satisfaction post-implementation. The one complaint I hear from Life Sciences folks is the cost — nearly everyone gripes about how expensive Veeva is, which makes it harder for them to replace Documentum because funding at these levels is a big hurdle.

What I always say when someone complains about Veeva’s cost is, “When you’re the only person selling water in the desert, it’s not on sale.” But more seriously, I think if firms did a better job calculating the total cost of ownership of their Documentum platform (both sunk costs and costs to continue to support), they would find Veeva’s price tag more in line with what they’re going to spend anyway … but I’ll leave that arithmetic for a future blog post.

OpenText Documentum, 1 Year On

So much for my take after a year on OpenText's Documentum acquisition. Again, my perspective is biased. However, I’ve tried to not only be honest about my biases but adjust for them in my assessment — even doing that, I think the writing’s on the wall for Documentum. Which is a shame, because moving ECM platforms is painful, expensive, and risky no matter how you look at it, and hundreds of firms will be faced with all of this over the next five to seven years.